Verifly Review: What is On-Demand Drone Insurance?
BY Alan Perlman14 October 2016
Below is a fun interview where I review Verifly with Jay Bregman, the company’s CEO. Verifly is an on-demand insurance company for the sUAS / drone industry.
Verifly offers drone insurance starting at $10/hour.
And check out our free drone insurance guide here.
Alan: Hey everybody. Alan from Drone Pilot Ground School here. In this video I’ve got a very special guest, Jay Bregman, from Verifly.com, and we’re going to get into Verifly and what that is.
The goal of this video is to explore drone insurance. There is no better person to talk about insurance when it comes to small unmanned aerial systems than Jay. So welcome, Jay. Thanks so much for joining us.
Jay: Alan, it’s great to be here. Thank you so much for everything you’ve done for the community.
Jay is the CEO and co-founder of Verifly. I’ll make sure to link to Verifly and his contact information below this video in the lecture notes.
One thing I wanted to ask right off the bat, Jay. I’m on your LinkedIn profile right now, and I see that back in 2012 you were listed in Times of London as 100 people to watch, narrowly edging out Kim Jong Un and David Beckham’s new child. What’s that about?
Jay: It was a competitive list that year in 2012; lots of people on it, and I felt I had to give a little context. That was a little bit of an inside joke.
Alan: Before we get into Verifly — I have so many questions for you about drone insurance — before we get into all that, can you talk a little bit about who you are and sort of the nexus of Verifly and what you’re background is. Where are you coming from?
Jay: I’ve been an entrepreneur for all of my working life. I started my first company out of grad school in London. I went to London School of Economics, and started a company called eCourier, which was an on-demand delivery company, sort of like “coast mates” in 2003, that was eventually sold to the Royal Mail, which is the British version of the Post Office. Then I started Hailo, which is an on-demand system for connecting people in taxis, you guys might be familiar with the craze that’s been there. That was just recently sold to Daimler, the maker of Mercedes Benz.
When I left Hailo, I wanted to actually stop doing this string of businesses and start getting back into hobbies that I enjoyed when I was younger, namely building and flying RC planes with my dad.
This was 2015, now, and I just could not find anybody that was doing that, because everybody had converted into drones. So I started getting really heavily into flying drones as a recreational user, and I resolved not to make a business out of it, but I kind of couldn’t helped seeing some of the gaps that I believe needed to be filled in order for the market to really flourish. The biggest one that was glaring was risk.
I just felt that there was no real solution for the inevitable proliferation of drones in the same way as cars, basically, would increase and require some sort of new insurance fabric. Likewise, I thought drones would, and someone had to develop a new type of insurance that was specific to the data that was given off by drones, and also the risk that was very different than anything else before including manned aircraft.
Alan: Let’s talk about insurance for drones. What is drone insurance? Why do I even need it?
Jay: There’s a couple different types of drone insurance, but the drone insurance that Verifly delivers is liability insurance. The reason why you need it primarily — our primary customers are commercial operators, or prospective commercial operators, that want to get access to the best and most lucrative jobs.
The thing is, if you’re going to a real estate broker, or you’re going to a wedding planner, they are all going to ask you for a certificate of insurance and they’re going to ask specifically for aviation insurance and they’re probably going to ask you for a million dollars.
They’re going to ask you for a million dollars of insurance, whether you’re the plumber that’s going to fix the house that’s being listed or you’re doing aerial photography of it. It’s just the nature of the services industry.
That’s why people come to us. What we do is we provide on-demand drone insurance for commercial and recreational users. The way it works is it’s an app; you open it up; it draws a quarter mile radius around you; that’s your coverage area. It then computes based on what we know of the risks inside that area, a price per hour, starting at $10 per hour, and then all you do is put in your credit card details. There’s no application process at all, and — poof — you’ve got a million dollar policy underwritten by Global Aerospace, a top aviation insurance provider, with $10,000 invasion of privacy covered.
Alan: OK. So you just blew my mind. Because traditionally, in order to get any kind of insurance — I just got insurance for a new home that my wife and I purchased; getting car insurance — you have to fill out a really long form; you might have to have a phone conversation with a broker.
How did you guys circumnavigate all this? How can I get instantly approved? That’s amazing.
Jay: Thank you. Yes. And it is. That’s the thing that people really don’t like most about, particularly drone insurance, because the application process is onerous and many people don’t get approved. Why? Because they don’t have experience. How could they have experience? It’s such a new industry.
The reason why the underwriters do that is because they are primarily giving out annual policies. If they give out an annual policy to you, and let’s say you pay 1 or 2,000 dollars a year for that for a million dollar policy, you could fly as many times as you want, anywhere you want in the United States. Basically, that’s a huge risk that the underwriter is taking, and being insurance, once that policy is issued, it’s very difficult to call back. So in that case, what do they do? They have to heavily due-diligence the operator.
In our case, what we’re doing is we’re talking about insuring the environment. We’re basically looking at a very particular place at a very particular time, which is all that the clients will require, and we’re basically saying to the underwriters — let’s have a price for that particular area, and be able to deliver insurance just for that area.
When it comes to the differences in operators that are normally diligence-by-application-process, the difference in operators for a one-hour policy that’s operating in a quarter mile area is very, very small.
Also, we feel like this is important, because we’re now getting to the stage with drones where they’re semi-autonomous, and pretty soon they’ll be fully autonomous. We cover autonomous flight, even as it is now, but in that flight there is no real operator. It’s only about the environment that you’re operating in that determines what the risk is at any particular time.
Alan: That’s great. I want to go back to something that we talked about a couple minutes ago. You mentioned this million dollars in liability coverage — it’s kind of this market threshold. I can speak from experience when you’re having these sales calls with potential employers, that is kind of the minimum.
It can go up from there too, right? Depending on what kind of job you’re doing, you might need two or three or five million in coverage. But you guys are focused on that one million in coverage, these hour-long blocks, right? So if I have a shoot that I’m doing next week and I’m not covered right now; maybe I just got my part 107 certification; maybe this is my first or second job. You’re telling me that I can open up your app…
Is this something I do ahead of time? Or is this something I do the morning of? How does the scheduling work?
Jay: First of all, we do have many more options other than the one million dollars; it’s just that we’re not offering them right now. We are building a two-and-a-half million dollar limit, and in terms of hours, we are building 4- and 8-hour packs that are going to come online soon, that actually have a slightly discounted price,
So basically what you would do with Verifly today, is you would go to the site; there’s a sample policy on our website; many people use that as what they show to clients so that they know that they’re going to be covered. Then they go to the site and they purchase the policy right before they put the drone in the air. They can email that policy instantly to the client, or they can show it to them on their device, where there’s a PDF that they have if they want to print it out. Then they’re good to go from there.
The reason that’s so significant, and what we did not expect when we started this, was what many pilots are doing, is they’re taking that proof of insurance, and they’re basically using that as part of their invoice.
They’re saying — look, you asked me for a million dollars of insurance; I got it for $10 an hour, but now it’s going to be a line item on my invoice, and by the way, here’s the proof that I had a policy that I bought specifically for you — unlike an annual policy where it’s very difficult or impossible to fracturalize it towards what would happen.
So a lot of people are finding that actually, not only is our insurance cost effective, but actually it’s free.
Alan: That’s really, really interesting.
I guess my question to you, to kind of play devil’s advocate, why would somebody want to buy an annual policy versus using Verifly? Where would an annual policy be more beneficial? Is it a certain type of business? Is it a certain type of work that you’re doing on behalf of businesses? Can you speak a little bit to that?
Jay: In drones, there is basically the 90-95% of the market, which is the under 15 pounds, mostly DJI type work, and then there’s the 5-10% of sky futures, very complex, heavy birds, oil and gas need a thirty million dollar limit. “I need a hundred thousand dollars of hull insurance for the…
That’s what we don’t do. We’re about the 95% of the market. That’s where most people are always going to spend their time.
Alan: OK. That’s very helpful.
Can you talk a little bit about the underwriter-broker relationship? I think a lot of people are intimidated when they hear the term “insurance.” I know I was, myself, when I started shopping around for home insurance policies and drone insurance policies.
I didn’t really understand the market, like how it works. You mentioned that you guys work with Global Aerospace. They’re an underwriter, right? So they’re the ones who are actually running the risk numbers and putting together the policies that are issued through you.
Is that the right way to explain it?
Jay: Basically, Global Aerospace is a company that’s been around for 90 years; it’s one of the leaders in aviation insurance; it manages a pool of billions and billions on behalf of some of the most prestigious insurance companies in the world.
Basically it specializes in aviation. We got together because they really want to be the leaders in unmanned aviation as they are in manned aviation, and so were willing to explore innovative business models in order to do this.
So the traditional relationship… If you want to go and buy aviation insurance, traditional manned aviation insurance, or you want to buy unmanned aviation annual policies, you can’t go directly to Global Aerospace. They don’t do it. Their distribution is all around having brokers in place.
Normally that works great for manned aviation. Why? Because they’re 20 million dollar plans, and they’re huge policies, right? Huge liability policies. So one deal with United Airlines is kind of a broker’s dream.
Whereas in the drone world it’s much more like auto insurance. It’s a consumerized thing where it’s a lot of little policies. Basically, that’s where somebody like us comes in to play, which is a technology enabled broker that is linked directly into Global Aerospace and we can originate the policies ourselves and send them directly to you without any inter-mediation. So it seems to you like you have a seamless interface to Global’s liquidity.
Alan: That’s great.
You mentioned that you guys offer insurance to both hobbyists and commercial operators, so I don’t necessarily need to prove to you that I’m a certified FAA part 107 certificate holder. Is that right?
Jay: That’s absolutely right. By the way, there’s no real way that you could do that in an online environment or even an off line environment today, either. What we find is that we do have recreational users that are using us just casually. But most of our recreational users are actually our commercial users that are going out on a weekend; they know they have a business, and basically they don’t want to risk that, God forbid, anything happen, whether we’re flying their new Phantom IV just recreationally getting to use it, not for any particular job. If something happened to them, then their business could be taken away or their assets could be taken away. So we find that we get a lot of crossover between the two.
Alan: That’s really interesting.
One thing I realize as we’ve been talking about liability insurance — I know there’s also hull insurance. Can we sort of take a step back and get to that 30,000-foot view of — what is liability actually mean? To somebody who’s never purchased liability insurance before, what does it cover? What’s the purpose of having it in the first place?
Jay: Liability insurance is basically insurance against damage to property, third party property, not your own, but somebody else, and injury to people, not yourself but somebody else. The primary reason people get liability policies in a commercial context is because they’re required to do so by their clients, or their clients might not require it but they certainly view that you having a leg up, if you have it. The secondary reason is they want to protect themselves, because if anything were to happen while they were on a job, even if a client didn’t require insurance, then they could be held responsible, and they’d have nobody to protect them if that happened.
Liability insurance you will have with most auto insurance. It’s required by most states, and the difference is that there is a certain portion of your auto insurance, for example, that is set aside for liability and then there is a certain portion that is insuring the car itself, so if you have an accident to the car itself, it would repair the car itself. So basically that’s the “hull” insurance part of it, where hull is insuring the drone itself; liability is insuring the activity, the use of the drone for third parties.
Unlike a car, drones, the average price is what — 1000-1500 dollars — so for most people it doesn’t pay to get hull. We don’t offer it currently, we’re looking at potentially offering it for the future but it’s not really highly demanded. Really, people come to us because hull is not something that clients will ever need and the market will ever need; you will never need to grow your business.
Liability is what you need to grow your business, and that’s why people come to us.
Alan: Interesting side note there. For what it’s worth, liability insurance is not actually required by the FAA, but you kind of need it, right? Any professional drone operator that doesn’t have liability insurance won’t be taken seriously, is going to lose out to other folks who do have insurance, and of course won’t be covered in the event of an accident. These things are flying lawnmowers, so it’s a good idea to be insured, in case something happens.
Jay, just to give sense of people of where you guys are at… Because Verifly — we’re recording this video in fall of 2016; people are going to be watching this throughout the rest of this year and into next year, 2017. You guys are relatively new to the industry, right? You just launched several weeks ago. I don’t know if there are any numbers that you feel comfortable sharing so far about your growth? But what’s the response been like on your end so far?
Jay: We launched the second week of August, and even though it was only a partial month for us, we ranked in the top 10 drone apps globally, in the app store. So that should give you — including DJI and the other OEM — so that should give you a flavor for how well things are doing.
Alan: That’s great. That’s really great. And it sounds like you’re going to be adding more to your service offerings and continue to innovate over the next several months, which is so great to hear.
When you think about the drone industry, when you think about insurance, but also just the industry as a whole, what keeps you up at night? Is there anything that you’re worried about?
Jay: Yes. That’s a really good question. I think that what we do and the reason we do this is because we like to help pilots build businesses and to build bigger businesses, and we want to make one thing that was their biggest cost, apart from the drone, and even maybe in place of the drone, insurance we saw as being the biggest cost and the biggest headache. So we wanted to get rid of that pain from pilots. Basically, all that we hoped is that there are more and more and more pilots and that the market continues to grow as it has been.
So far, this market — it’s clear to pretty much everybody, including the FAA — that it is going nowhere but up. They keep re-forecasting up their number of pilots; every six months it’s higher and higher, and that’s being borne out by what’s going out with the part 107 test, and the fact that they put in place what I think everybody agrees is a really rational structure for growing a really enormous market.
I guess it doesn’t really keep me up at night. But we certainly watch very carefully the part 107 tests and how people are reacting to the regulatory environment.
Alan: I think it’s a lot more sensible now than it has been leading up to this point. I think that there’s still a lot of work to be done on the regulatory side for sure. I think this case by case waiver process is fascinating and I know that the FAA is committed to continue to explore beyond visual line of sight, and flying at night and all sorts of really cool stuff.
Jay: Just to interject there, those were all things that were unexpected. Nobody could have known them before August 29th. So we now have development projects in place that will be able to allow people with waivers to fly and to get insurance wherever they are authorized to do so, and also including flying at night. We actually already had a price for flying at night that we submitted to in our state filings in anticipation that this would happen, we just didn’t expect it to happen so quickly.
So we’re very excited about these basically, more rational airspace kind of developments.
Alan: And there’s just so much more airspace available as well. Before, even if you had the “triple 3” exemption, even if you would get that blanket COA attached to that exemption, if you were flying within X miles of an airport — and I say “X miles” because there are different classes of airports; it depended on whether it was towered or it was a large airport or a small private airport — you would still have to file additional paperwork. Whereas now, as long as you’re in class “G” — class Gulf — uncontrolled airspace, you are good to go. Of course there are other airspace considerations; I am oversimplifying it. But there’s so much more airspace available now to small unmanned aerial systems operators, and that’s very exciting.
Jay: Yes, it’s totally cool.
Alan: Last question I want to ask you. I see an Inspire in the background there. Is that your bird of choice right now? What are you flying?
Jay: It absolutely is. One of the best experiences that I’ve had — our whole geospacial team is in Dublin. So we went out to the Irish countryside and I brought it over and we did some FPB flying over some fields. The cows were very interested in what we were doing, but it was just a supreme experience. It’s a wonderful machine.
Alan: Yes, that’s really fun to fly. Any thoughts — not to put you on the spot — any thoughts on DJI’s newest drone, which just launched?
Jay: If you see that bag back there, that’s actually the goodie bag that they gave out from the launch. We were there in New York.
It is an unbelievable machine. When Michael Perry, who is the head of strategic partnerships, was presenting it, what he did — and a lot of people didn’t see this — he had a backpack that was just sitting on a pedestal, and everyone thought he was going to take it out of the back pack. Then he said, “No, no. No, I’ll just take it out of my pocket,” and he pulls it out of his back pocket. And you realize just what a step change — you know, 24 processors — it is an unbelievable piece of hardware. It’s quiet.
It really just shows how DJI has just some amazing engineering talent and they continue to really think about what’s going to be next. I think some of that technology is bound to make it into the new commercial models, which are rumored to be coming out pretty soon.
Alan: It’s crazy to think that somebody could be watching this interview 60 days from now, 90 days from now, and there’s a brand new model on the market. We saw Unique launch the Breeze; we saw GoPro launch the Karma, and now DJI is launching the Mavik. What’s next, right?
Jay: That’s actually really interesting because one of the other disadvantages of an annual policy — and it’s a vestige from manned aviation days — is it’s linked to a particular drone, and it’s very hard to generally switch between other drones.
The policy that Verifly delivers is for the use of any drone under 15 pounds. So if you buy an hourly policy, you can actually fly one for 15 minutes; you can land it; you can fly a totally different drone. So we have a lot of people that even may have an annual policy on one of their drones, but they’ve gotten a new one or a new model comes out, and basically they just want to use it from time to time. That’s where we come in; we’re very happy with that.
Alan: That’s great. Jay, if people want to learn more about you, connect with you or Verifly, your company, what’s the best place for them to get in touch?
Jay: People can email me at firstname.lastname@example.org, or you can go — the best way is you can go to the app store and download the app. The app has within it tons and tons of information, a very rich hundred-question FAQ, and that’s available on both the App Store and Google Play.
Alan: Thank you so much for joining us. I certainly learned a lot about drone insurance. We covered liability insurance; we covered hull insurance; we talked about Verifly and where you guys are positioned in the market, and this was a great interview. Thanks so much.
Jay: Thank you so much. Wish you all the best.